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Nine, Fairfax take on Netflix

Evan Schwarten

Media giants Nine and Fairfax are taking on the likes of Netflix with a new a $100 million online video streaming service.

Nine and Fairfax will spend up to $50 million each to establish the new service, StreamCo, which will give users access to movies and TV programs on demand for a monthly subscription fee.

Analysts praised Nine and Fairfax's decision to enter the growing online streaming business, which is the subject of considerable attention thanks to the success of US-based Netflix.

"It does look like Nine has finally woken up to the idea that the Netflix of this world and on-demand streaming is coming about," IG market analyst Evan Lucas said.

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"I see it as a reasonably good step forward."

But Mr Lucas said the success of the service would hinge on what content it offered.

StreamCo, which is set to launch sometime this financial year, has already secured "cornerstone" deals with content providers but hasn't given any hints about the types of shows and movies it will offer.

Fusion Strategy founder Steve Allen said streaming-on-demand currently accounted for around three per cent of the overall television market, though it was growing strongly and would be boosted by the roll out of the national broadband network.

"It's quite small but it is going to double in the next five years," he said.

"It's not going to be a large part of the landscape in terms of dollar, but as the NBN rolls out it is going to be more and more the thing that consumers are going to demand."

He said the joint venture was a smart move for both companies and paired Nine's ability to make content and its relationship with international providers with Fairfax's experience in running a subscription-based service.

The new venture will have plenty in the way of competition, notably from Netflix which has an estimated 200,000 subscribers in Australia despite not being officially available here at this stage.

Other subscription-based contenders include Quickflix, which has just over 120,000 paying customers, Foxtel's Presto as well as free services like ABC's iview and Ten's tenplay.

And Nine's arch rival Seven also has plans to enter the market.

Seven West Media boss Tim Worner on Wednesday said the company was in talks to launch its own service.

"Over the last few months those discussions have accelerated and we expect to make an announcement soon but we're not ready to make an announcement yet," he said.